The Post and the EPA’s Perception Problem

The Washington Post’s take on the EPA, in the wake of Al Armendariz, is scathing. The Post editorial:

“The most reasonable interpretation is also among the most disturbing — that Mr. Armendariz preferred to exact harsh punishments on an arbitrary number of firms to scare others into cooperating. This sort of talk isn’t merely unjust and threatening to investors in energy projects. It hurts the EPA. Mr. Armendariz was right to resign this week, while EPA Administrator Lisa P. Jackson denied that his comments reflected the agency’s approach. Yet the question will remain: Is an aggressive attitude like the one Mr. Armendariz described common among EPA officials?”

The editorial seems to answer its own question – noting EPA’s moves to block an Idaho couple from adding on to an existing home in an established residential area. Earlier this year the U.S. Supreme Court upheld the couple's right to challenge the agency in court without

significant delay and potentially large fines. The Post:

“Maintaining the legitimacy of the EPA’s broad regulatory authorities requires the agency to use its powers fairly and, in so doing, avoid the impression that its enforcement is capricious or unduly severe.”

Yet, the newspaper argued, the EPA seems to already have a reputation for abusive and injudicious conduct, with the Armendiraz and Idaho cases serving to reinforce public perceptions. Not good for EPA, not good for the legitimate work it does keeping our air and water as clean as possible. The Post:

“The lesson for Ms. Jackson and her boss, President Obama, from these two episodes is clear: The agency’s officers must have a clear sense when to deploy its mighty power and when to exercise discretion. That’s true for the sake of the economy and to ensure that the EPA will be able to continue its necessary work for years to come.”

America’s oil and natural gas industry has engaged EPA in recent months over proposed rules for emissions during natural gas production and ozone, as well as its approval of E15 gasoline and other issues. Industry recognizes the agency’s regulatory role, while asserting that EPA should fully consider cost impacts before it takes action – on individual companies and on their work finding and developing the energy America needs.

The Post is right: The exercise of great power must be accompanied by good judgment, and to the extent these cases suggest a lack of judiciousness at EPA, it’s concerning.

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Washington Post: Keystone XL Rejection Has ‘Little Rational Basis’

More on the Keystone XL pipeline. The Washington Post editorializes:

“President Obama’s refusal so far to authorize Keystone XL has little rational basis. … Attracting foreign investment in projects that will create U.S. jobs requires predictable regulatory procedures. The way to encourage the efficient extraction and delivery of the oil that the United States will require for decades is to make clear that government won’t use the issue as a political football.”

The editorial makes a couple of other points:

Opponents of Canadian oil sands (and the Keystone XL) are mistaken to believe that stopping the pipeline will keep 170 billion barrels of oil in the ground – because Canada has other means to get the oil to market, as well as other markets willing to buy it.Political skirmishing in Washington has been detrimental to overall progress on the project.

Meanwhile, POLITICO has this guest opinion piece by Karl Rove, pointing to the administration’s Keystone XL rejection as a prime example of a self-inflicted inability to create jobs:

“Exhibit A is the Keystone XL pipeline. It would have brought oil from Canada’s tar sands and North Dakota’s prolific Bakken field to Gulf Coast refineries, factories and chemical plants. This would have created tens of thousands of private-sector jobs and reduced U.S. dependence on [imports]. … No matter. Extreme environmentalists opposed this vital infrastructure project. Rather than offend them, President Barack Obama blocked the pipeline’s construction.”

The two pieces help underscore the point that there are no good reasons to hold up the Keystone XL project, and that the administration is squandering a great opportunity to create jobs and help strengthen U.S. energy security. As the Post says, the president’s refusal to approve this shovel-ready project makes little rational sense.

An all-of-the-above energy approach must include oil and natural gas because it is our primary energy source now and into the future. The Keystone XL pipeline would be an integral part of such a strategy, which could see all of our liquid fuel needs met domestically and from Canada by 2024.

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Ohio Summit: Talking Energy, Jobs

Editor’s note, 5/3: The event has concluded; see below for the archived videos.

There’s not a better venue for a high-level discussion of energy, jobs and economic growth than Ohio, where energy-driven expectations are soaring – given the growth from shale development in neighboring Pennsylvania and accelerating work in Ohio’s own Utica Shale play. Thus, today’s “Ohio Energy Jobs Summit” is well located.

Hosted by The Hill newspaper and sponsored by the Coalition for American Jobs, the summit has an array of speakers and panelists scheduled including Gov. John Kasich, U.S. Rep. Bill Johnson of Ohio and API President and CEO Jack Gerard.

Ohio voters certainly have strong expectations for shale exploration and development. A Quinnipiac poll in January showed they overwhelmingly believe that shale = jobs. The survey also showed that most believe the economic benefits from energy development outweigh other concerns.

The half-day discussion from Ohio begins at 9 a.m. You can watch via webcast, here:

You’re also welcome to join in the conversation on Twitter by using the hashtag, #energyjobssummit.

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All For Efficiency

A recent post on the White House Blog updates the administration’s effort to see federal agencies make at least $2 billion in energy efficiency upgrades over the next two years. Heather Zichal, deputy assistant to the president for energy and climate change, writes that agencies have identified $2.1 billion in projects that will pay for themselves using performance-based contracts. Zichal:

“Of the $2.1 billion in energy upgrade projects identified by agencies, more than $100 million in Energy Savings Performance Contracts (ESPCs) and Utility Energy Savings Contracts (UESCs) have been awarded already, and an additional $1.2 billion in projects are in development – demonstrating strong momentum towards meeting the President’s goal.”

Later, Zichal notes that increased energy efficiency has a multitude of benefits:

“[It’s] one of the fastest, easiest, and cheapest ways to create jobs, save money, and cut down on harmful pollution. … In this pursuit, we take an all-in approach. Whether it’s the historic fuel economy standards that will nearly double the miles you can go on a gallon, or investments that have led to more than a million homes weatherized across the country – we keep building on efficiency, and we keep betting on American workers and American know-how to help create a secure energy future.”

Clearly, the country is becoming more energy efficient, as this chart from the Energy Information Administration, showing energy use per capita (green line) and projections (1980-2035), shows: 

America’s oil and natural gas companies share the goal of increased energy efficiency. ExxonMobil’s Ken Cohen calls efficiency “our most powerful energy solution.” Cohen writes:

“Efficiency — technologies and actions that enable us to do the same, or more, only with less energy — is often overlooked as an answer to the question of how we will meet rising energy demand safely and affordably, while also reducing greenhouse gas emissions.”

Industry has invested heavily in efficiency measures – devoting more than $239 billion since 1990 to improve the performance of its products, facilities and operations. API’s 2012 State of American Energy report:

“Energy efficiency is the cleanest, quickest and most cost-effective way to extend today’s energy supply into the future. The efficient use of energy is not only a core value of the oil and natural gas industry, it’s also a daily practice.”

Some examples:

Technological advances, such as 3D seismic visualization and horizontal drilling let companies access resources more precisely and with less impact on the environment. It used to take a 20-acre drill site to access an area of one square mile underground. Today, 80 square miles can be accessed with a drill site as small as two acres. Half as many wells are needed to produce the same amount of energy as 20 years ago.Submersible, remotely operated vehicles allow deepwater operators to install, monitor and repair underwater equipment using less energy.Plants and refinery upgrades have increased facility energy efficiency.Combined heat and power, or cogeneration, technologies use excess heat from to produce additional energy, for example, in refineries.Carbon-reducing technologies that help promote greater overall efficiency attracted more than $70 billion in industry investments 2000-2010 – well more than the federal government over the same period and nearly as much as all other private industries combined.

When it comes to energy efficiency, America’s oil and natural gas companies are on it.

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To the President’s Ear: Build the Keystone XL

In an interview with Fox Business Channel this week, billionaire Warren Buffett voiced support for construction of the Keystone XL pipeline:

"I’m not an expert, but it certainly seems like it makes sense to me. There are an awful lot of pipelines running in the United States and net, they've certainly been a huge plus for the country. … Based on what I know, I would say it makes sense.”

That the “Oracle of Omaha” supports the Keystone XL is significant. That Buffett’s support for the project follows similar opinions by others known to have the president’s ear is important as well. These include:

Former President Bill Clinton (Feb. 29, 2012):

“I think we should embrace [the Keystone XL pipeline] and develop a stakeholder-driven system of high standards for doing the work." 

AFL-CIO President Richard Trumka (May 6, 2012):

“[America’s unions] are not divided on the pipeline itself. They are divided on how the pipeline is done. … I think we are all unanimous by saying we should build the pipeline, but we have to do it consistent with all environmental standards, and I think we can work that out, I really do, and we are for that happening.”

Former Obama ‘car czar” Steve Rattner (Jan. 5, 2012):

“My instinct is [the president] should approve it. My instinct is we need the energy, we need the jobs and it can be done in a safe way.”

Let’s see. That’s one of the most successful businessmen in the history of the planet, a former president, one of organized labor’s top leaders and one of the administration’s former leading economic policy advisors – all in favor of the Keystone XL, a project that would create jobs, deliver energy and help boost our country’s future energy security.

The president is the reason the Keystone XL remains on the drawing board. He has the authority to end more than three years of reviewing and delaying. API Executive Vice President Marty Durbin, in a conference call with reporters:

“We’d like to remind the president and the Congress that bipartisan majorities in both the House and Senate have voted in favor of the Keystone XL project, and a recent Gallop poll shows strong public support for project by a 2-1 margin.  In addition, the state of Nebraska is fully engaged in a process to quickly choose a new route that avoids sensitive areas. To borrow from the president’s campaign, it’s time to move forward on this critical project.  Keystone XL is as ‘good-to-go’ as it gets.”

To recap: Buffett, Clinton, Trumka, Rattner. The president has listened to them before. Is he listening now, on the Keystone XL?

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The Demand for Energy and Steel

There’s a good story going on in Lorain, Ohio, a steel town that has seen ups and downs. Thanks to the surge in production of energy from shale in neighboring Pennsylvania, the current trend is decidedly up.

John Wilkinson, who manages U.S. Steel’s Lorain tubular operations facility that makes steel pipe, says good years (2007-08) were followed by the economic downturn in 2009. Layoffs were ordered. Shale has played a big role in turning things around, building demand for steel products including casings to line wells and extraction tubing. Wilkinson:

“Now with the upturn in the economy, the things we’re seeing from the Marcellus Shale and the increase in production, we’ve had the opportunity to recall almost all of those people and actually hire an additional 300 people in the last 18 months.”

Check out this video for a sense of the hope and opportunity that’s come to Lorain through the shale/hydraulic fracturing revolution:

It’s not just one community or one company. Shale plays around the country are generating energy, jobs and economic growth.

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E15: A Fuel Before Its Time

E15 – gasoline containing 15 percent ethanol that has EPA approval  – is one of those ideas that looks good on paper but seems headed for problems in the real world. API’s Bob Greco, director for downstream and industry operations, outlined some of them for reporters during a conference call:

Testing so far shows the higher concentration of ethanol would not be fully compatible with much of the dispensing and storage equipment the nation’s gas stations. A recent API review estimated half of the existing retail outlet equipment isn’t E15 compatible.As a result, there could be damage to equipment, safety problems and potential environmental concerns at gas stations.Difficulties with E15 getting into the market could erode public support for the nation’s renewable fuels program.Refiners could face problems in the future, caught between satisfying federal requirements for blended fuels and the lack of a retail market for those fuels.

Greco said EPA’s E15 approval isn’t a mandate to sell and that the timing of its emergence into the marketplace will depend on clearing hurdles in individual states. Still, the concern is that E15 wasn’t thoroughly evaluated before it got EPA approval.

“The availability of biofuels for blending in gasoline is a good thing because of its favorable octane, and the industry supports a realistic and workable Renewable Fuels Standard.  In fact, more than 90 percent of all gasoline sold in the country has a 10 percent blend of ethanol.  But EPA has not done its homework before introducing E15 to America.  The Agency’s enthusiasm for E15 has clouded its judgment and led to approval of a fuel before adequate study has been done.”

Compatibility issues loom large, Greco said. “Even with vehicles the EPA says are compatible, automakers disagree,” he said. Last summer U.S. Rep. James Sensenbrenner of Wisconsin forwarded letters from car companies to EPA Administrator Lisa Jackson that outline their E15 concerns. A sampling:

Ford: “Ford does not support the introduction of E15 into the marketplace for the legacy fleet. … Fuel not approved in the owner’s manual is considered misfueling and any damage resulting from misfueling is not covered by the warranty.”

Chrysler: “We are not confident that our vehicles will not be damaged from the use of E15. … The warranty information provided to our customers specifically notes that use of the blends beyond E10 will void the warranty.”

Honda: “Vehicle engines were not designed or built to accommodate the higher concentrations of ethanol.  … There appears to be the potential for engine failure.”

Ultimately, Greco said, consumers might become confused and ultimately could bear higher costs:

“Without a market for the higher ethanol blends, Congress’ biofuels mandate could result in higher compliance costs or production constraints that could place upward pressure on gasoline prices for consumers.”

One questioner asked whether NASCAR’s use of higher-ethanol fuel suggests E15 concerns are overstated. “I don’t know about you,” Greco said, “but I don’t drive a race car.”

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Facts, Not Excuses, Should Guide Decision on Re-Routed Keystone XL

It’s good to hear that TransCanada has submitted its new application for a presidential permit to build the Keystone XL pipeline. The application comes just weeks after the Nebraska legislature approved a bill to move forward with a new route in that state that avoids the sensitive Sand Hills region.

Even better news would be that the White House, after a long list of excuses that prevented timely approval of the project, is now ready to give the go-ahead – dropping a position that a Washington Post editorial said has “little rational basis.” That analysis is reinforced not only by public opinion, but also by economic and environmental data. For example:

Americans support construction of the Keystone XL by nearly a 2-1 margin, according to a recent Gallup poll.A bipartisan, veto-proof majority in the U.S. House of Representatives recently voted to support construction of Keystone XL, the fifth time the House has backed the project. In March, 56 U.S. senators voted in favor of building the Keystone XL.More than 80 percent of Americans believe U.S. policies should support the use of oil from Canada’s oil sands.According to the U.S. Pipeline and Hazardous Materials Safety Administration, pipelines are the “safest and most-effective” way of transporting oil and natural gas. In addition, a comprehensive environmental assessment from the federal government concluded that the Keystone XL would have only “limited” impacts and be the safest pipeline ever constructed under current regulations.With unemployment still above 8 percent nationwide, the Keystone XL not only would create thousands of new jobs but also would help preserve jobs at U.S. refineries and production sites.While there are many factors that affect the price of gasoline families use to fill up their tanks, approving the Keystone XL would send a strong market signal that more supply is on the way, helping put downward pressure on the global price of crude oil, which accounts for 76 percent of the price paid at the pump. The pipeline could bring upwards of 830,000 barrels per day of Canadian oil from Alberta to U.S. refineries, with approximately 25 percent of the pipeline’s capacity used to deliver oil from North Dakota and Montana.

The application also comes as a new poll finds that Canadians support increased oil sands development by about a 2-1 margin. Among all provinces, the lowest level of support was in Quebec, where a clear majority – 55 percent – still supports development.

API Executive Vice President Marty Durbin said it’s time to approve the Keystone XL:

“The earth hasn’t moved, the geology hasn’t changed, the information remains the same, so there should be no reason for a re-review of KXL. The pipeline will be state of the art and has already been thoroughly examined for more than three years, including three environmental assessments. … The president should take this opportunity to approve the entire pipeline to demonstrate he is serious about an ‘all the above’ energy strategy. There is no legitimate reason for delaying this project any further. … We urge President Obama to support this project that will make us more energy secure.”

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